Natural killer (NK) cells are innate immune cells that are best known for their immediate effector functions against virus-infected cells and tumor cells. Several findings prompted us to study NK cells in the context of HCV infection and treatment. First, NK cells are the most prevalent lymphocyte subset in the liver constituting about 30% of intrahepatic lymphocytes. Second, the current treatment regimen for chronic hepatitis C includes IFN-alpha, a potent activator of NK cells. Third, the genotype for certain receptors regulating NK cell activity is associated with a higher likelihood of spontaneous and treatment-induced HCV clearance. NK cells are controlled by the integration of signals from activating and inhibitory cell surface receptors, which include killer cell immunoglobulin-like receptors (KIRs), lectin-like receptors (NKG2A-F) and natural cytotoxicity receptors (NKp30, NKp44 and NKp46). In the absence of inflammation or infection, NK cells receive mostly inhibitory signals. NK cell activation occurs when signaling through activating receptors overcomes inhibition. In addition, NK cells can get activated by inflammatory cytokines such as type I interferons (IFN-&#945;and IFN-&#946;) and IL-12 that are commonly released in response to virus infections. NK cell effector functions include the destruction of target cells via perforin/granzyme-mediated lysis or TNF-related apoptosis-inducing ligand (TRAIL)-mediated apoptosis, and the production of cytokines such as TNF-alpha, MIP-1beta and IFN-gamma. IFN-gamma in particular has elicited great interest because it is abundantly produced, has direct antiviral activity and provides a link between innate and adaptive immunity by contributing to the priming of CD4+ and CD8+ T cells, and via induction of chemokines to T cell recruitment to the target organ. Different effector functions have traditionally been associated with specific NK cell subsets, which can be distinguished based on CD56 expression. Approximately 90% of NK cells in the peripheral blood express low levels of CD56 on their cell surface. These CD56-dim NK cells respond quickly to viral infection, exert cytotoxicity and produce chemokines and cytokines within hours. The remaining 10% of NK cells with high level of CD56 expression (CD56-bright) respond slower and produce large amounts of IFN-gamma and TRAIL with little perforin/granzyme-mediated cytotoxicity. We and others have recently shown that patients with chronic HCV infection display a polarized NK cell phenotype with increased cytotoxicity and TRAIL production and decreased IFN-gamma production. Induction of cytotoxicity and production of IFN-gamma require differential STAT1/4 signaling as previously shown in a mouse model of lymphocytic choriomeningitis virus-induced hepatitis. In this model, virus-induced type I IFN results in increased expression of STAT1, which competes with STAT4 in the signaling events downstream of the IFN-alpha/beta receptor. The result is preferential STAT1 over STAT4 phosphorylation, increased NK cell cytotoxicity and decreased IFN-gamma production. However, a demonstration that changes in IFN-signaling correlate with changes in NK cell function in HCV-infected patients has not yet been provided. Furthermore, the kinetics of the in vivo responsiveness of NK cells to IFN in humans are not known and may be very important for the therapeutic use of IFN-alpha, e.g. for the therapy of chronic HCV infection. To address these points we performed a prospective analysis of phenotype, function and signaling events in NK cells in chronic HCV infection and during the first 12 weeks of IFN-alpha-based therapy. This time period defines an early virological response, which is predictive of the ultimate treatment outcome. It is important to understand the mechanisms of interferon-induced HCV clearance because only about 50% of the treated patients achieve a sustained response and because interferon will remain an important component of new treatment regimens with direct antiviral agents. Changes in NK cell effector functions during IFN-alpha-based therapy were correlated with changes in STAT signaling. Within hours of treatment initiation, NK cells of early virological responders increased expression of the activating receptors NKG2D, NKp30 and CD16, decreased expression of NKG2C and 2B4 and decreased expression of the inhibitory receptors SIGLEC7 and NKG2A resulting in NK cell activation. NK cell cytotoxicity, measured as degranulation and TRAIL production, peaked after 24 h (P<0.01) concomitant with a rise in serum alanine aminotransferase levels (P<0.05), whereas IFN-gamma production decreased within 6 h and did not recover for more than 4 weeks (P<0.05). NK cells from liver biopsies taken 6 h after treatment initiation showed an increase in the cytotoxic CD16+ NK cell subpopulation (P<0.05) and a trend towards increased TRAIL production. Degranulation of peripheral blood NK cells correlated to the treatment-induced first phase decline in viral load (P<0.05) and remained higher in early virological responders than in nonresponders for weeks of follow up. These results show that IFN activates NK cells early after treatment initiation. In particular, the cytotoxic function is strongly induced, which correlates to the virological response. Therefore, NK cell activation indicates responsiveness to IFN-alpha-based treatment and thus might suggest an involvement of the innate immune cells in viral clearance. STAT1 levels in NK cells were significantly higher in patients with chronic HCV infection than in uninfected controls. STAT1 levels and induction of phosphorylated STAT1 (pSTAT1) increased further during IFN-alpha-based therapy with preferential STAT1 over STAT4 phosphorylation. Induction of pSTAT1 correlated with increased NK cytotoxicity (TRAIL expression and degranulation) and decreased IFN-gamma production. NK cells from patients with a greater than 2 log-10 first phase HCV RNA decline to IFN-alpha-based therapy (>99% IFN effectiveness) displayed strong pSTAT1 induction in vivo and were refractory to further stimulation in vitro. In contrast, NK cells from patients with a less than 2 log-10 first phase HCV RNA decline exhibited lower pSTAT1 induction in vivo (p=0.024) but retained greater IFN-alpha responsiveness in vitro (p=0.024). NK cells of all patients became refractory to in vivo and in vitro stimulation by IFN-alpha during the second phase virological response. These data show that IFN-alpha-induced modulation of STAT1/4 phosphorylation underlies the polarization of NK cells towards increased cytotoxicity and decreased IFN-gamma production in HCV infection, and that NK cell responsiveness and refractoriness correlate to the antiviral effectiveness of IFN-alpha-based therapy.